Incoterms (International Commercial Terms) are international trade standards developed by the International Chamber of Commerce (ICC). They are widely used in supply contracts around the world, clarifying the obligations of the supplier and the recipient in the transport of goods. Incoterms play a key role in international trade by providing clarity and predictability in transactions, minimising the risk of disputes.
CLASSIFICATION OF INCOTERMS
Incoterms can be divided into two main categories: universal terms, which apply to all modes of transport, and terms specific to sea and inland waterway transport.
Incoterms for all modes of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP)
1.EXW (Ex Works): The supplier makes the goods available at his factory or warehouse. The recipient bears the full cost and risk of transport from the time of receipt of the goods.
2.FCA (Free Carrier): The supplier delivers the goods to
a carrier designated by the recipient. The risk passes to the recipient upon delivery to the carrier.
3.CPT (Carriage Paid To): The supplier pays the costs of transport to the specified destination, but the risk passes to the recipient when the goods are handed over to the carrier.
4.CIP (Carriage and Insurance Paid To): Similar to CPT, except that the supplier is also required to insure the goods during transit.
5.DAP (Delivered At Place): The supplier delivers the goods to the specified destination. Risk is transferred to the recipient at the time of delivery.
6.DPU (Delivered at Place Unloaded): The supplier bears the cost and risk until the goods are unloaded at the specified destination.
7.DDP (Delivered Duty Paid): The supplier bears all costs and risks associated with the delivery of the goods, including duties and taxes in the country of destination.
Incoterms specific to sea and inland waterway transport (FAS, FOB, CFR, CIF)
1.FAS (Free Alongside Ship): The supplier delivers the goods alongside the ship at the port of loading. The risk is transferred to the recipient at the time of delivery.
2.FOB (Free on Board): The supplier bears the cost and risk until the goods are loaded onto the ship. The risk then passes to the recipient.
3.CFR (Cost and Freight): The supplier bears the cost of transport to the port of destination, but the risk passes to the recipient when the goods are loaded onto the ship.
4.CIF (Cost, Insurance and Freight): Similar to CFR, except that the supplier is also responsible for insuring the goods for transport.
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Katarzyna Rzewuska, Managing Associate
katarzyna.rzewuska@ngllegal.com